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Ericsson To Open $1.3-billion R&D Centre In Montreal

|Includes: LM Ericsson Telephone Company (ERIC)

The Telecommunications giant (NASDAQ:ERIC) is opening a new R&D Center on the west side of the Montreal Island in Quebec, Canada to help develop new wireless technology and services and
it is expected to begin operations in early 2015.

The swedish company will save $10 million a year with the preferential "L" rate Hydro-Quebec (electricity) will charge on the 45 megawatts of power the complex will consume, and will also benefit from annual tax breaks totaling about $20 million. Quebec will provide as much as $30-million worth of financial support to back the construction and operation of the new centre.

One of those breaks is a 10-year "holiday" on taxes on profits, which the provincial government announced in its budget last November for any new project worth over $300 million.

"This is a big deal for us," Ericsson Canada President Mark Henderson said in an interview, explaining the challenge the company faces in producing technology to handle the explosive growth of data volumes on communications networks. "This centre that we're going to develop in Montreal is going to play a key role in our product platforms going forward."

Disclosure: I am long ERIC.